The major cryptocurrency exchange is experiencing customer withdrawals.
Binance founder Changpeng Zhao (CZ) reportedly told staff he would expect a rough few months, as the major cryptocurrency exchange is experiencing customer withdrawals.
The warning comes as the crypto industry faces challenges after high-profile bankruptcies and amid tougher regulations.
Binance, the world’s largest cryptocurrency exchange by trading volume, saw net outflows reaching $3 billion on Tuesday, November 13th, according to Blockchain analytics firm Nansen.
$3 Billion Withdrawn from Binance at Peak, Nansen Data Shows
The news comes as Changpeng Zhao, the founder, and CEO of Binance, tried to reassure his team that the company is financially strong enough to survive the crypto winter.
The coin trading platform has been dealing with the effects of a series of negative events in the sector, including the collapse of FTX, a major competitor in the foreign exchange market that filed for bankruptcy in November. FTX founder Sam Bankman-Fried was arrested in the Bahamas on charges brought against him in the United States.
A Reuters report on a US Justice Department investigation into Binance was also a factor in investor jitters, according to Andrew Thurman, content lead at Nansen, who commented on the outflow for CNN Headlines, that prosecutors are considering a money laundering investigation also emerged against a backdrop of speculation over Binance’s reserves.
CZ Acknowledges Withdrawals, Seeks to Minimize Outflow, and Calm Down Colleagues
In a tweet posted on Tuesday, Changpeng Zhao acknowledged the outflow of funds and insisted that Binance has been in similar situations before. “Some days we have net withdrawals; some days we have net deposits. Business as usual for us,” he said, suggesting that “it’s a good idea to ‘stress test withdrawals’ at each CEX on a rotating basis.”
Meanwhile, the crypto executive also sought to alleviate concerns about the health of the exchange in a memo to his staff. According to a Bloomberg report citing the paper, Zhao stressed that the industry is going through “a historic moment” where Binance is in a strong financial position and will “survive any crypto winter.”
“While we expect the next few months to be eventful, we will get through this challenging period and will be stronger for getting through it,” CZ told the Binance team. Referring to the latest developments in the space, he added that FTX’s recent collapse has led to “a lot of extra scrutiny and tough questions” for his exchange.
Binance, the world’s leading cryptocurrency exchange, has been working to increase transparency and convey trust to its users after the FTX crash.
Binance, the world’s leading cryptocurrency exchange, has been working to increase transparency and convey trust to its users after the FTX crash.
Following a proof of reserves and proof of liability verification, global auditor Mazars concluded in a report that Binance’s bitcoin reserves are fully guaranteed.
By Audy Castaneda
